When a Credit default isn’t that Bad
Saturday, November 25, 2006
I was alerted to an alarming statistic recently, that one in three people have a default on their credit file. This can be a concern for borrowers as the credit file is something any prospective lender will look at before giving them the thumbs up.
The good news is that it's getting easier to get a loan, even with an impairment.
What is a credit default?
If you have not paid a bill or debt in the past, or let it lapse for a long period of time before it was paid, there's a good chance the company who you owed the money to placed a default note on your credit file.
If you have applied for credit during the past seven years (credit card, home loan, store card etc), there is a very good chance you have a credit file.
How do you Check your Credit File?
Call Baycorp on 1300 305 087 and order one. There are a few options, either a free copy which you will receive in 21 days or you can pay for a copy which will be received within a few working days. Baycorp also have a subscription option, where they send you an email every time your credit file receives an enquiry.
Different Levels of Defaults
From a lenders perspective, the seriousness of a default on your credit report depends on:
1. The amount the debt was for
2. What the debt was for (many banks are now ignoring paid Telco defaults)
3. Whether the debt has been paid for
4. How long it took to pay the debt back
5. The explanation for the debt
6. Your conduct since the default
The Good News
There are many lenders that specialise in lending to the credit impaired, these are generally called ‘Non-Conforming’ lenders.
They will look at your situation, and if your fall within their guidelines, price a loan according to the level of risk they determine the deal is.
Non Conforming Loan advantages
Will accept certain levels of credit default
Obtaining the loan will help you repair your credit history (if the repayments are made on time)
They will often enable you to buy the property when the banks say no.
Non Conforming Loan disadvantages
They are often priced 1-4% over standard rates, depending on level of impairment
The entry and exit fees can be harsh
So if the banks say "no", dont despair! There may still be hope through a 'Non Conforming' lender.
posted by Daniel Serratore @ 4:46 pm,
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The Author
Daniel Serratore
Daniel is heading up the new generation of Finance Brokers in Sydney. With his fresh approach and "can do" attitude, Daniel has developed relationships with key people within the Sydney lending market which enables him to source great deals for his clients. Daniel is big on customer service and has built his business purely by referrals from clients and other businesses. You can catch him via the email link on the top of this page
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This blog was developed as a resource for our clients and the general public. Although the internet will provide you with many lending providers, I am still to find a resource that shares ideas, tips and general useful info to assist borrowers make the right decisions. Hence this blog was born!
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